By Jason White
On June 29, 2007 the world would never be the same. I would doubt anyone would know the significance of that day, but that was when the first iPhone was released. Now you might be wondering, why is this significant? Well, what phone do you own? What phone do your kids own? And when you get your next phone, I would bet it will be an iPhone. We witnessed an extreme change in technology and how it affects our everyday lives. Facetime became the norm for face to face conversation when we were away from our friends and family, especially during the pandemic. We send text messages using Wifi instead of paying for texting rates. This is just one of many examples of how a jump in technology changed everyone’s lives. We are seeing the same thing today with the huge advances in financial technology (fintech).
You may think that your life is not affected by fintech, but it is all around us. Fintech is using new software and technology to change the way people pay for things. Fintech is also the driving force behind the advances in cryptocurrency. This development is changing the way that consumers interact with businesses. Fintech is powerful in that people are able to trade stocks, pay for food and clothes, and even apply for mortgages with the power of their smartphone.
Fintech is not only for the consumer. A new wave of fintech is upon us and it deals with business to business (B2B) transactions. This new technology optimizes the way businesses interact with each other. They can now speed up payment processing, apply for loans, and offer electronic payments. All of these services are available to your business and a healthy investment to make for the future. Soon, all businesses will be using some sort of fintech in order to develop their business.
Accounts Payable Automation
Accounts payable is a portion of your business that demands high levels of attention and accuracy. If your accounts payable is still being run manually, you may want to rethink that. Accounts payable automation helps small businesses by automatically sorting invoices and payment orders instead of keeping track of financial transactions by hand. An AP automated system also decreases the time for buyers to pay their suppliers, getting money in your pocket faster. For example, in a study done by APCQ, the difference between the best and worst companies in terms of cost per invoice is $7.46. The difference largely depends on the best performers automating their accounts payable.
Applying for Loans
Finding funding for small and large businesses can be challenging, but fintech has changed how businesses apply for loans. By moving the loan application process online, fintech is able to cut out many of the factors that make the process a hassle in the first place. Companies like Tyro and Prospa expedite the loan application process and get money to small businesses faster. LoanMe, a digital lending company, reports that a traditional loan could take 24 to 72, while a loan using fintech could only take minutes!
This sector of B2B transactions makes things like automatic payments in order to make the process easier and faster, which helps increase your company’s cash flow.
If you are mailing a check to pay, you have to mail it (which takes 2-5 days) and then you once you receive the check and have to make sure it clears (24 to 48 hours), and then you have to spend money for processing the check! Electronic payments typically make your money available to you in no less than 3 to 4 hours. You no longer have to deal with sorting invoices and keep track of where your money is, this new technology will do it for you.
Since online payments are on the rise, the technology used to protect you must rise as well. Blockchain uses a multi-step verification process in order to ensure the safety of your funds. Also, the tech creates a database for your records to be accessed and that cannot be changed or altered once they are submitted. This prevents an outside user from accessing your information and changing it for their benefit. CSNC reports that 84 percent of companies are already actively using blockchain technology. Most companies sense its future in the workplace as a foundation for what is to come.
When you finally got your first smartphone, how much easier did life become? You had a literal computer sitting in the palm of your hand compared to a phone that took 5 minutes just to send a text message. That is the feeling from switching to traditional businesses practices to fintech. With this update in new technology, handling the finances of your business will become easier, your cash flow will start to become more up-to-date, and you can use technology to protect your business. Investing in fintech could be what brings your business to the next level.
Driscoll, M. (2020, October 28). Metric of the Month: Accounts Payable process cost. Retrieved February 03, 2021, from https://www.cfo.com/expense-management/2015/06/metric-month-accounts-payable-process-cost/
Rooney, K. (2018, August 27). 84% of companies are dabbling in BLOCKCHAIN, new survey says. Retrieved February 03, 2021, from https://www.cnbc.com/2018/08/27/84percent-of-companies-are-dabbling–in-blockchain-new-survey-says-.html